Postal Life Insurance (PLI) is the oldest life insurer in the country which not only gives insurance cover to a taxpayer but also offers tax benefits. Perplexed about the tax benefits for Postal Life Insurance?
Read this blog thoroughly to gain knowledge about tax benefits on PLI maturity. Also, you will get to know the answer to your doubt, ‘Does PLI come under 80C?’
A complete guide on tax benefits for Postal Life Insurance
PLI was introduced by the Government on 1st February 1884. It is reliable among the nationals and is the most preferred policy till date due to its affordable premium rates and good coverage. The best part is its tax benefits which are the needs of rural residents. Hence, RPLI (Rural Postal Life Insurance Policy) came into effect in March 1995.
Most of the taxpayers ask, is the PLI scheme a subsidy? Under Section 80C of the Indian Income Tax Act 1969, premiums paid for Postal Life Insurance policies are tax deductible.
Is a 5-year Post Office time deposit eligible for 80C?
Postal Life Insurance provides the following insurance plans:
Whole Life Assurance
Endowment Assurance
Child Plan
10 year RPU
Investing in a 5-year time deposit in the post office is eligible for tax savings under section 80C. The minimum investment amount is Rs. 1000. Because of section 80C, taxpayers can lower their taxable income.
What are the benefits of PLI in the Post Office?
The PLI and RPLI tax exemptions and rebates one can avail of are grouped under sections 80C and 10D.
Tax benefits of PLI under section 80C:
Under 80C of the Indian Income Tax Act, life insurance policy premiums are eligible for tax deductions.
The overall deduction amount is restricted to Rs. 1.5 lac.
The tax deduction amount permitted under this section for policies issued on or before 31st March 2012 is 20% of the sum assured.
For policies issued after this, the tax deduction available is limited to only 10% of the sum assured.
These benefits apply to PLI plans issued for the taxpayer or his/ her spouse and children only.
Tax benefits of PLI under section 10D:
Under Section 10D, the sum received as maturity benefit by the policyholder will be taxed under the following criteria:
In the case of policies bought between 1st April 2003 and 31st March 2012, the annual premium amount must be 20% less than the sum assured.
In the case of policies bought after 31st March 2012, the annual premium amount must be below or equal to 10% of the sum.
If the sum assured is at least 10 times the annual premium, the amount received as maturity benefit will be completely tax-free.
Surrender benefits and bonuses are exempt from tax.
Which PLI scheme is best and what are the benefits?
Whole life assurance and convertible whole life assurance policies are the best-rated postal life insurance plans by taxpayers. The following are the benefits of PLI policies:
One of the most cost-effective life insurance products with higher returns and low premiums.
Enable the policyholders to nominate their beneficiaries.
Entitled to avail loan facility, if policy has concluded 3 or more years,
Convertible policy from whole life to endowment assurance.
More than one policy can be bought.
If you want to avail the tax benefits on PLI maturity, you have to follow the complete guidelines and choose the best plan for yourself.
